Yahoo Finance Inequality is worsening: Is a universal basic income the answer?
The world’s richest 2,153 people have more money than the poorest 4.6 billion, the latest Oxfam global wealth report revealed in January this year.
The situation is worse for women: the 22 richest men in the world have more wealth than all the women in Africa.
And it’s an issue of growing political and cultural prominence.
Bong Joon-Ho made history this week with his film, Parasite, winning best picture at the Oscars.
This was the first time a foreign-language film had taken home the top gong, but the story it tells plays on that universal question: are we doing enough to address inequality?
According to Ipsos polling released in January this year, poverty and social inequality is the top global concern followed by unemployment.
Kosovo Prime Minister cuts his salary in half, and that’s the mood of the moment
The new Prime Minister of Kosovo, Albin Kurti, and his cabinet ministers will halve their salaries to try to demonstrate their commitment to tackling wage inequality.
His predecessor doubled the Prime Ministerial salary two years ago to €2,950 a week, triggering outrage. One third of the Kosovo population is unemployed with the small country one of the poorest European nations after declaring independence from Serbia in 2008.
The average monthly private sector wage in Kosovo is €401, while those in the public sector earn a significantly higher €573 a week.
New Zealand Prime Minister Jacinda Ardern also made headlines in 2018 after turning down a $12,000 pay rise. As in Australia, politicians’ wages are set by an independent body, however Ardern said a scheduled 3 per cent raise was unacceptable, introducing legislation to block the raise.
"We do not believe, given that we are on the upper end of the salary scale, that we should be receiving that kind of salary increase," she said.
More recently, she named inequality as one of the biggest issues the country faces as it heads to a 2020 general election.
While these gestures are a start, the question is whether they lead to genuine reductions in inequality.
More radical moves
Artificial intelligence will take over 20 million manufacturing jobs in the next 10 years, a report from Oxford Economics has suggested, or around 8.5 per cent of the global manufacturing workforce.
In Australia, that means South Australia is the most vulnerable due to its huge manufacturing industry.
That same report, however, finds that robots will also create new jobs faster than it wipes old jobs out.
But there will be a period of adjustment, at the same time as the global inequality gap is widening, something politicians are grappling with.
Both Bernie Sanders and Elizabeth Warren have proposed introducing wealth taxes targeting “freeloading billionaires”, in the words of Warren.
And former presidential candidate Andrew Yang tested the theory of a universal basic income - that is, a lump sum given to each adult citizen every month with no strings attached.
Yang has since dropped out of the race to become the next president.
Finland’s universal basic income experiment
But the idea still holds some water: Finland concluded its two-year universal basic income experiment in 2018, finding that the income didn’t boost employment but did lead to increased wellbeing.
The researchers wanted to know if no-strings-attached funds would encourage unemployed people to seek out work, hypothesising that current unemployment benefits disincentivised people from seeking employment.
"The recipients of a basic income were no better or worse than the control group at finding employment in the open labour market", research coordinator at the Labour Institute for Economic Research Ohto Kanninen said.
The study also found those who received the income had more trust in other people and societal institutions, suggesting social cohesion benefits.
"Even though the basic income model developed for the experiment is not likely to be adopted as such for more extensive use, I think the experiment was very successful," Finland's social affairs minister Pirkko Mattila said in a statement.
"We can use the data from the experiment to redesign our social security system; that is going to be the next major reform.”
Billionaires Richard Branson and Elon Musk have also thrown their weight behind the idea, noting the massive workforce changes artificial intelligence will bring.
"A lot of exciting new innovations are going to be created, which will generate a lot of opportunities and a lot of wealth, but there is a real danger it could also reduce the amount of jobs," Branson said in 2017.
"This will make experimenting with ideas like basic income even more important in the years to come.”
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